T-Mobile Pays $2.4 Billion for Verizon Spectrum

BONN, GERMANY and NEW YORK — T-Mobile has agreed to pay Verizon $2.4
billion for 700 MHz spectrum that carrier won in the 2008 auction of what had
been airwaves occupied by TV channels. T-Mobile announced that it would buy15 A
Block licenses for $2.365 billion in cash plus the transfer of eight more
wireless licenses valued at $950 million. The deal gives T-Mobile low-band
spectrum (sub 1 GHz) in nine of the top 10 U.S. markets and 21 of the top 30.

Combined with its
existing Boston A-Block holdings, T-Mobile said it would have low-band spectrum
covering approximately 158 million people in New York, Los Angeles, Dallas,
Houston, Philadelphia, Atlanta, Washington D.C., and Detroit. T-Mobile said it anticipates
rolling out service and compatible handsets on this A-Block spectrum as early
as the fourth quarter of 2014.

On the LTE front, the company said that in 2013, it deployed 10+10 MHz
4G LTE in 43 of the top 50 metro areas, and is “commencing substantive deployments”
of 20+20 MHz 4G LTE in 2014. The company launched its nationwide 4G LTE network
in 2013, which currently covers approximately 209 million people in 273 metro
areas.

As part of the transaction, the two companies will realign spectrum blocks in certain
markets, primarily in northern California and the Atlanta area. The agreements
are subject to approval by the Federal Communications Commission and the
Department of Justice, and other customary closing conditions. Following
regulatory approval, these transactions are expected to close in mid-2014.

“Recall that T-Mobile purchased AWS
spectrum from US Cellular for $0.95/MHzPop in June 2013. Today’s $1.72/MHzPop
average represents an 81 percent increase. From the 700 MHz perspective, the
$1.85/MHzPop price represents a 16 percent increase from the $1.59 paid by Verizon
in the FCC’s [2008] spectrum auction.”

The deal is good news for Dish, which is sitting on 40 MHz of nationwide
wireless spectrum. Ryvicker said at $1.72 MHzPop, Dish’s spectrum is worth
$21.4 billion.

“Today’s spectrum sale illustrates
the continued increase in spectrum values,” she said in an analyst note. “In
particular, the $1.74 MHz/Pop for AWS/PCS reinforces our belief that there is
significant present and future value in Dish’s AWS-4 spectrum holdings.”